TaxTMI 
TaxTMI 
Convention between the Republic of India and the Republic of Finland for the avoidance of Double Taxation with respect to taxes on income and on capital
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.... Union of India. ANNEXURE CONVENTION BETWEEN THE REPUBLIC OF INDIA AND THE REPUBLIC OF FINLAND FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL. The Government of the Republic of India and the Government of the Republic of Finland, Desiring to conclude a new Convention for the avoidance of double taxation with respect to taxes on income and on capital, Have agreed as follows: ARTICLE 1 PERSONAL SCOPE This Convention shall apply to persons who are residents of one or both of the contracting States. ARTICLE 2 TAXES COVERED 1. The taxes which are the subject of the present Convention are: (a) in Finland: (i) the state income and capital tax; (ii) the communal tax; (iii) the church tax; (iv) the sailors' tax; and (v) the tax withheld at source from non-residents' income; (hereinafter referred to as " Finnish tax "); (b) in India: (i) the income-tax including any surcharge thereon; (ii) the surtax; and (iii) the wealth-tax; (hereinafter referred to as " Indian tax "). 2. The Convention shall apply....
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....h he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests); (b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode; (c) if has he an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national; (d) if he is a national of both States or of neither of them, the competent authorities of the contracting States shall settle the question by mutual agreement. 3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. ARTICLE 5 PERMANENT ESTABLISHMENT 1. For the purposes of this Convention, the term " permanent establishment " means a fixed place of busin....
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.... establishment in the first-mentioned contracting State in respect of any activities which that person undertakes for the enterprise, if such a person: (a) has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or (b) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise. 6. Notwithstanding the preceding provisions of this article, an insurance enterprise of a contracting State shall, except in regard to reinsurance, be deemed to have a permanent establishment in the other contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 7 applies. 7. An enterprise shall not be deemed to have a permanen....
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....e property of an enterprise and to income from immovable property used for the performance of independent personal services. ARTICLE 7 BUSINESS PROFITS 1. The profits of an enterprise of a contracting State shall be taxable only in that State unless the enterprise carries on business in the other contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to (a) that permanent establishment; (b) sales in that other State of goods or merchandise of the same or similar kind as those sold through that permanent establishment; or (c) other business activities carried on in that other State of the same or similar kind as those effected through that permanent establishment. 2. Subject to the provisions of paragraph 3, where an enterprise of a contracting State carries on business in the other contracting State through a permanent establishment situated therein, there shall in each contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct....
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....e by that permanent establishment of goods or merchandise for the enterprise. 6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 7. Where profits include items of income which are dealt with separately in other articles of this convention, then the provisions of those articles shall not be affected by the provisions of this article. ARTICLE 8 AIR TRANSPORT 1. Income derived by an enterprise of a contracting State from the operation of aircraft in international traffic shall be taxable only in that State. 2. Paragraph 1 shall likewise apply in respect of participations in pools of any kind by enterprises engaged in air transport. 3. For the purposes of this article: (a) interest on funds connected with the operation of aircraft in international traffic shall be regarded as income from the operation of such aircraft; and (b) the term " operation of aircraft " shall include transportation by air of persons, live-stock, goods or mail, carried on by the owners or lessees or charter....
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.... out of investments made after the date of signature of this Convention. 4. The term " dividends " as used in this article means income from shares, or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident. 5. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the dividends, being a resident of a contracting State, carries on business in the other contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of article 7 or article 15, as the case may be, shall apply. 6. Where a company which is a resident of a contracting State derives profits or income from the other contracting State, that other state may not impose any ta....
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.... in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 6. Where, by reason of a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this article shall apply only to the last mentioned amount. In such a case, the excess part of the payments shall remain taxable according to the laws of each contracting State, due regard being had to the other provisions of this convention. ARTICLE 13 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1. Royalties and fees for technical services arising in a contracting State and paid to a resident of the other contracting State may be taxed in that other State. 2. However, such royalties and fees for technical services may also be taxed in the contracti....
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.... when the payer is that State itself, a political sub-division, a statutory body, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a contracting State or not, has in a contracting State a permanent establishment or a fixed base in connection with which the obligation to make the payments was incurred, and such payments are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 7. Where, by reason of a special relationship between the payer and the recipient or between both of them and some other person, the amount of the royalties or fees for technical services exceeds, for whatever reason, the amount which would have been paid in the absence of such relationship, the provisions of this article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the law of each contracting State, due regard being had to the other provisions of this convention. ARTICL....
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....acting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a contracting State in respect of an employment exercised in the other contracting State shall be taxable only in the first mentioned State if: (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the calendar year concerned, and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and (c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3. Notwithstanding the preceding provisions of this article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic, may be taxed in the contracting State in which the place of effective management of the enterprise is situated. ARTICL....
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....or the purpose of rendering the services. 2. (a) Any pension paid by, or out of funds created by, a contracting State or a statutory body or a local authority thereof to an individual in respect of services rendered to that State or body or authority shall be taxable only in that State. (b) However, such pension shall be taxable only in the contracting State of which the individual is a resident if he is a national of that State. 3. The provisions of articles 16, 17 and 19 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a contracting State or a statutory body or a local authority thereof. ARTICLE 21 STUDENTS AND APPRENTICES 1. Payments which a student of business, technical, agricultural or forestry apprentice who is or was immediately before visiting a contracting State a resident of the other contracting State and who is present in the first mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State. 2. A student at a ....
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....nagement of the enterprise is situated. 5. Elements of capital of a resident of a contracting State not dealt with in the foregoing paragraphs of this article shall be taxable only in that State except that, if such elements are situated in the other contracting State they may also be taxed in accordance with the law of that other State. ARTICLE 24 ELIMINATION OF DOUBLE TAXATION 1. In Finland, double taxation shall be eliminated as follows: (a) Where a resident of Finland derives income or owns capital which, in accordance with the provisions of this convention, may be taxed in India, Finland shall, subject to the provisions of sub-paragraph (b), allow: (i) as a deduction from the tax on income of that person, as amount equal to the tax on income paid in India, (ii) as a deduction from the tax on capital of that person, an amount equal to the tax on capital paid in India. Such deduction in either case shall not, however, exceed that part of the tax on income or on capital, as computed before the deduction is given, which is attributable, as the case may be, to the income of the capital which may be taxed in India. (b) Dividen....
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....me bears to the entire income chargeable to Indian Tax. (b) For the purposes of the credit referred to in sub-paragraph (a) above, where the resident of India is a company by which surtax is payable, the credit to be allowed against the Indian tax shall be allowed in the first instance against the income-tax payable by the company in India and, as to the balance, if any, against the surtax payable by it in India: Provided that income which in accordance with the provisions of this convention is not to be subjected to tax may be taken into account in calculating the rate of tax to be imposed. ARTICLE 25 NON-DISCRIMINATION 1. The nationals of a contracting State shall not be subjected in the other contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected. 2. The taxation on a permanent establishment which an enterprise of a contracting State has in the other contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that o....
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.... to resolve the case by mutual agreement with the competent authority of the other contracting State, with a view to the avoidance of taxation which is not in accordance with the convention. 3. The competent authorities of the contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the convention. In particular, they may consult together for the purpose of reaching an agreement on the allocation of income in cases referred to in article 10. They may also consult together for the elimination of double taxation in cases not provided for in the convention. 4. In the event the competent authorities reach an agreement referred to in paragraphs 2 and 3, taxes shall be imposed on such income, and refund or credit of taxes shall be allowed by the contracting States in accordance with such agreement. It shall be implemented notwithstanding any time limits in the domestic law of the contracting States. 5. The competent authorities of the contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advi....
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....ve been complied with. 2. The convention shall enter into force thirty days after the date of the later of the notifications referred to in paragraph 1 and its provisions shall have effect: (a) in Finland: (i) in respect of taxes withheld at source, to income derived on or after 1st January in the calendar year next following the year in which the convention enters into force; (ii) in respect of other taxes on income, and taxes on capital, to taxes chargeable for any taxable year beginning on or after 1st January, in the calendar year next following the year in which the convention enters into force; (b) in India, in respect of taxes for assessment years beginning on or after 1st April of the calendar year next following the year in which the convention enters into force. 3. The Agreement between Finland and India for the avoidance of double taxation of income, signed at New Delhi on 23rd June, 1961, as amended by exchange of notes on 16th August, 1979, shall cease to have effect at the time that the provisions of this convention shall be effective in accordance with the provisions of paragraph 2. ARTICLE 30 TERMINATION This conven....